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S&P 500 firms return $1 trillion to shareholders

S&P 500 companies paid out $428 billion in dividends and bought up $573bn of their own shares, according to S&P Dow Jones Indices analyst Howard Silverblatt. S&P 500 companies have also ploughed some of the windfall from lower US taxes into growth or efficiency investments. AFP

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S&P 500 companies have returned a record $1 trillion to shareholders over the past year, helped by a recent surge in dividends and stock buybacks following sweeping corporate tax cuts introduced by Republicans, a report on Friday showed.

In the 12 months to end of March, S&P 500 companies paid out $428 billion in dividends and bought up $573bn of their own shares, according to S&P Dow Jones Indices analyst Howard Silverblatt.

That compares to combined dividends and buybacks worth $939bn during the year through March 2017, Silverblatt said in a research note.

Earnings per share of S&P 500 companies surged 26 per cent in the March quarter, boosted by the Tax Cuts and Jobs Act passed by Republican lawmakers in December.

Companies have been returning much of that profit windfall to shareholders via share buybacks and increased dividends at never before seen amounts, highlighted by Apple’s record $23.5bn worth of shares repurchased in the first quarter.

S&P 500 companies have also ploughed some of the windfall from lower taxes into investments toward growth or becoming more efficient. First-quarter capital expenditures totalled at least $159bn, up more than 21 per cent from the year before, according to S&P Dow Jones Indices.

The biggest overhaul of the US tax code in over 30 years, the new law slashes the corporate income tax rate to 21 per cent from 35 per cent, and charges multinationals a one-time tax on profits held overseas.